Energy Stock News: NGL Energy Partners LP (NYSE: $NGL) Announces Fourth Quarter and Fiscal 2017 Financial Results
- Net income for the fourth quarter and Fiscal 2017 was $26.5 million and $143.9 million, respectively, compared to a net loss of $207.0 million and $187.1 million, respectively, for the fourth quarter and Fiscal 2016
- Adjusted EBITDA for the fourth quarter of Fiscal 2017 was $121.0 million and $380.8 million for all of Fiscal 2017, compared to $154.0 million for the fourth quarter of Fiscal 2016 and $424.1 million for Fiscal 2016
- Distributable Cash Flow for the fourth quarter of Fiscal 2017 was $84.0 million and totaled $234.8 million for the year
- Growth capital expenditures and other investments totaled approximately $84 million during the fourth quarter, the majority of which was related to the acquisition of the natural gas liquid terminals from Murphy Energy Corporation
- Fiscal 2018 Adjusted EBITDA guidance of approximately $500 million to $525 million and expected distribution coverage of approximately 1.3x
TULSA, Okla. - May 25, 2017 (Investorideas.com Newswire) NGL Energy Partners LP (NYSE:NGL) ("NGL" or the "Partnership") today reported net income for the quarter ended March 31, 2017 of $26.5 million, compared to a net loss for the quarter ended March 31, 2016 of $207.0 million. Adjusted EBITDA was $121.0 million for the quarter ended March 31, 2017, a 21% year over year decrease when compared to Adjusted EBITDA of $154.0 million for the quarter ended March 31, 2016. Distributable Cash Flow was $84.0 million for the quarter ended March 31, 2017, compared to $122.5 million for the quarter ended March 31, 2016. Net income for the fiscal year ended March 31, 2017 was $143.9 million with Adjusted EBITDA for the year of $380.8 million compared to a net loss and Adjusted EBITDA of $187.1 million and $424.1 million, respectively, for the year ended March 31, 2016.
"Our fourth quarter results were adversely impacted by one of the warmest winters in the United States for the past 100 years negatively impacting both Retail Propane and Liquids as well as a decrease in Refined Products' results due to lower than historical line space values. While neither of these items change our core business strategies, we did adjust our expectations for the upcoming fiscal year for the refined products and propane businesses to account for the potential effects of similar events occurring in the upcoming year," stated Mike Krimbill, CEO of the Partnership. "We had many positive accomplishments during fiscal 2017, including the scheduled startup of Grand Mesa Pipeline, continued expansion of the Retail Propane, Water and Liquids businesses and a restructuring of our balance sheet. We look forward to fiscal 2018 and the continued growth of our Partnership."
Quarterly Results of Operations
The following table summarizes operating income (loss) by operating segment for the three months ended March 31, 2017 and March 31, 2016 (in thousands):
The tables included in this release reconcile operating income (loss) to Adjusted EBITDA for each of our operating segments.
Crude Oil Logistics
The Partnership’s Crude Oil Logistics segment generated Adjusted EBITDA of $29.5 million during the quarter ended March 31, 2017, compared to Adjusted EBITDA of $16.9 million during the quarter ended March 31, 2016. The Partnership’s Grand Mesa Pipeline project commenced commercial operations on November 1, 2016 and contributed Adjusted EBITDA of approximately $26.6 million during the fourth quarter. For fiscal 2018, the Partnership anticipates Adjusted EBITDA related to this project to be approximately $130 million based on current contracts and expected walk-up volumes. The average contract term on the pipeline is approximately nine years and all contracts are fee-based with volume commitments, which step up in the second and third years of operations.
The Crude Oil Logistics segment continued to be impacted by increased competition due to lower production in the majority of the basins across the United States. The Partnership’s quarterly results were also impacted by the flattening of the contango curve for crude oil during the quarter.
Refined Products and Renewables
The Partnership’s Refined Products and Renewables segment generated Adjusted EBITDA of $12.2 million during the quarter ended March 31, 2017, compared to Adjusted EBITDA of $52.3 million during the quarter ended March 31, 2016. The results for the quarter ended March 31, 2017 were negatively impacted by decreased demand for diesel fuel, lower than expected results for biodiesel and an extended decline in gasoline line space values on the Colonial Pipeline.
Refined product barrels sold during the quarter ended March 31, 2017 totaled approximately 37.1 million barrels, and increased by approximately 9.3 million barrels compared to the same period in the prior year, as a result of the increase in pipeline capacity rights purchased over the previous year and an expansion of our refined products operations. Renewable barrels sold during the quarter ended March 31, 2017 were approximately 1.9 million, compared to approximately 1.7 million during the quarter ended March 31, 2016.
The Partnership’s Liquids segment generated Adjusted EBITDA of $16.2 million during the quarter ended March 31, 2017, compared to Adjusted EBITDA of $37.9 million during the quarter ended March 31, 2016. The significantly warmer than normal winter resulted in lower margin and lower wholesale demand from retailers and our butane business continues to be negatively impacted by lower margins, railcar costs and lower storage utilization. Total product margin per gallon was $0.033 for the quarter ended March 31, 2017, compared to $0.071 for the quarter ended March 31, 2016. Propane volumes increased by approximately 29.2 million gallons, or 6.9%, during the quarter ended March 31, 2017 when compared to the quarter ended March 31, 2016; however, these volumes were lower than budgeted based on weather-related decreases to demand. Butane volumes decreased by approximately 2.0 million gallons, or 1.8%, during the quarter ended March 31, 2017 when compared to the quarter ended March 31, 2016. Other Liquids volumes increased by 3.7 million gallons, or 4.4%, during the quarter ended March 31, 2017 when compared to the same period in the prior year.
The Partnership’s Retail Propane segment generated Adjusted EBITDA of $48.9 million during the quarter ended March 31, 2017, compared to Adjusted EBITDA of $40.8 million during the quarter ended March 31, 2016. Propane sold during the quarter ended March 31, 2017 increased by approximately 9.4 million gallons, or 15%, when compared to the quarter ended March 31, 2016, primarily due increased demand in the pacific northwest and to acquisitions made during previous quarters. Distillates sold during the quarter ended March 31, 2017 decreased by approximately 0.4 million gallons when compared to the quarter ended March 31, 2016. Total product margin per gallon was $0.957 for the quarter ended March 31, 2017, compared to $0.905 for the quarter ended March 31, 2016.
The Partnership’s Water Solutions segment generated Adjusted EBITDA of $18.1 million during the quarter ended March 31, 2017, compared to Adjusted EBITDA of $11.6 million during the quarter ended March 31, 2016. The Partnership processed approximately 536,000 barrels of water per day during the quarter ended March 31, 2017, compared to approximately 479,000 barrels of water per day during the quarter ended March 31, 2016. The segment continued to benefit from the increased rig counts in the basins in which it operates, particularly in the Permian and DJ Basins. Revenues from recovered hydrocarbons totaled $11.8 million for the quarter ended March 31, 2017, an increase of $5.7 million over the prior year period related to increased crude oil prices and volumes.
Corporate and Other
Adjusted EBITDA for Corporate and Other was a loss of $3.9 million during the quarter ended March 31, 2017, compared to a loss of $5.5 million during the quarter ended March 31, 2016. General and administrative expenses for the quarter ended March 31, 2017 benefited from lower compensation expense and a reduction in insurance costs.
Capitalization and Liquidity
In February 2017, the Partnership issued $500.0 million of 6.125% Senior Notes due 2025 and received net proceeds from the issuance of $491.3 million, which were used to reduce the outstanding balance on its revolving credit facility. Also in February 2017, the Partnership issued 10,120,000 common units and received net proceeds from the issuance of $222.5 million, which were also used to reduce the outstanding balance on its revolving credit facility. The Partnership amended and restated its revolving credit facility during the quarter, which included extending the maturity to October 2021. Total liquidity (cash plus available capacity on the revolving credit facility) was approximately $874 million as of March 31, 2017.
Total long-term debt outstanding, excluding working capital borrowings, was $2,149.0 million at March 31, 2017 compared to $2,341.0 million at December 31, 2016, a decrease of $192.0 million. Working capital borrowings totaled $814.5 million at March 31, 2017 compared to $875.5 million at December 31, 2016, a decrease of $61.0 million driven primarily by a reduction in inventories during the quarter. Working capital borrowings, which are fully secured by the Partnership’s net working capital, are subject to a borrowing base and are excluded from the Partnership’s debt compliance ratios.
Fiscal Year 2018 Guidance
For fiscal 2018, the Partnership expects to generate Adjusted EBITDA of approximately $500 million to $525 million, which includes Adjusted EBITDA for Grand Mesa Pipeline of approximately $130 million. Distributable Cash Flow is expected to be between $300 million and $325 million and would generate over $100 million, or about 1.3x, distribution coverage at our current annualized distribution rate, including distributions on the Class A Preferred Units. The Partnership currently expects to spend approximately $150 million to $200 million on growth capital expenditures during fiscal 2018.
Fourth Quarter Conference Call Information
A conference call to discuss NGL’s results of operations is scheduled for 11:00 am Eastern Time (10:00 am Central Time) on Thursday, May 25, 2017. Analysts, investors, and other interested parties may access the conference call by dialing (800) 291-4083 and providing access code 22563375. An archived audio replay of the conference call will be available for 7 days beginning at 2:00 pm Eastern Time (1:00 pm Central Time) on May 25, 2017, which can be accessed by dialing (855) 859-2056 and providing access code 22563375.
Non-GAAP Financial Measures
NGL defines EBITDA as net income (loss) attributable to NGL Energy Partners LP, plus interest expense, income tax expense (benefit), and depreciation and amortization expense. NGL defines Adjusted EBITDA as EBITDA excluding net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, gain on early extinguishment of liabilities, revaluation of investments, equity-based compensation expense, acquisition expense and other. We also include in Adjusted EBITDA certain inventory valuation adjustments related to our Refined Products and Renewables segment, as discussed below. EBITDA and Adjusted EBITDA should not be considered alternatives to net income, income before income taxes, cash flows from operating activities, or any other measure of financial performance calculated in accordance with GAAP, as those items are used to measure operating performance, liquidity or the ability to service debt obligations. NGL believes that EBITDA provides additional information to investors for evaluating NGL’s ability to make quarterly distributions to NGL’s unitholders, and it is presented solely as a supplemental measure. NGL believes that Adjusted EBITDA provides additional information to investors for evaluating NGL’s financial performance without regard to NGL’s financing methods, capital structure and historical cost basis. Further, EBITDA and Adjusted EBITDA, as NGL defines them, may not be comparable to EBITDA, Adjusted EBITDA, or similarly titled measures used by other entities.
Other than for NGL’s Refined Products and Renewables segment, for purposes of the Adjusted EBITDA calculation, NGL makes a distinction between realized and unrealized gains and losses on derivatives. During the period when a derivative contract is open, NGL records changes in the fair value of the derivative as an unrealized gain or loss. When a derivative contract matures or is settled, NGL reverses the previously recorded unrealized gain or loss and records a realized gain or loss. NGL does not draw such a distinction between realized and unrealized gains and losses on derivatives of NGL’s Refined Products and Renewables segment. The primary hedging strategy of NGL’s Refined Products and Renewables segment is to hedge against the risk of declines in the value of inventory over the course of the contract cycle, and many of the hedges are six months to one year in duration at inception. The "inventory valuation adjustment" row in the reconciliation table reflects the difference between the market value of the inventory of NGL’s Refined Products and Renewables segment at the balance sheet date and its cost. We include this in Adjusted EBITDA because the unrealized gains and losses associated with derivative contracts associated with the inventory of this segment, which are intended primarily to hedge inventory holding risk and are included in net income, also affect Adjusted EBITDA.
Distributable Cash Flow is defined as Adjusted EBITDA minus maintenance capital expenditures, cash income taxes and cash interest expense. Maintenance capital expenditures represent capital expenditures necessary to maintain the Partnership’s operating capacity. Distributable Cash Flow is a performance metric used by senior management to compare cash flows generated by the Partnership (excluding growth capital expenditures and prior to the establishment of any retained cash reserves by the Board of Directors) to the cash distributions expected to be paid to unitholders. Using this metric, management can quickly compute the coverage ratio of estimated cash flows to planned cash distributions. This financial measure also is important to investors as an indicator of whether the Partnership is generating cash flow at a level that can sustain, or support an increase in, quarterly distribution rates. Actual distribution amounts are set by the Board of Directors.
Forward Looking Statements
This press release includes "forward-looking statements." All statements other than statements of historical facts included or incorporated herein may constitute forward-looking statements. Actual results could vary significantly from those expressed or implied in such statements and are subject to a number of risks and uncertainties. While NGL believes such forward-looking statements are reasonable, NGL cannot assure they will prove to be correct. The forward-looking statements involve risks and uncertainties that affect operations, financial performance, and other factors as discussed in filings with the Securities and Exchange Commission. Other factors that could impact any forward-looking statements are those risks described in NGL’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and other public filings. You are urged to carefully review and consider the cautionary statements and other disclosures made in those filings, specifically those under the heading "Risk Factors." NGL undertakes no obligation to publicly update or revise any forward-looking statements except as required by law.
NGL provides Adjusted EBITDA guidance that does not include certain charges and costs, which in future periods are generally expected to be similar to the kinds of charges and costs excluded from Adjusted EBITDA in prior periods, such as income taxes, interest and other non-operating items, depreciation and amortization, net unrealized gains and losses on derivatives, lower of cost or market adjustments, gains and losses on disposal or impairment of assets, equity-based compensation, acquisition-related expense, revaluation of liabilities and items that are unusual in nature or infrequently occurring. The exclusion of these charges and costs in future periods will have a significant impact on the Partnership’s Adjusted EBITDA, and the Partnership is not able to provide a reconciliation of its Adjusted EBITDA guidance to net income (loss) without unreasonable efforts due to the uncertainty and variability of the nature and amount of these future charges and costs and the Partnership believes that such reconciliation, if possible, would imply a degree of precision that would be potentially confusing or misleading to investors.
About NGL Energy Partners LP
NGL Energy Partners LP is a Delaware limited partnership. NGL owns and operates a vertically integrated energy business with five primary businesses: Crude Oil Logistics, Water Solutions, Liquids, Retail Propane and Refined Products and Renewables. NGL completed its initial public offering in May 2011. For further information, visit the Partnership’s website at www.nglenergypartners.com.
This news is published on the Investorideas.com Newswire - a global digital news source for investors and business leaders
Disclaimer/Disclosure: Investorideas.com is a digital publisher of third party sourced news, articles and equity research as well as creates original content, including video, interviews and articles. Original content created by investorideas is protected by copyright laws other than syndication rights. Our site does not make recommendations for purchases or sale of stocks, services or products. Nothing on our sites should be construed as an offer or solicitation to buy or sell products or securities. All investment involves risk and possible loss of investment. This site is currently compensated for news publication and distribution, social media and marketing, content creation and more. Contact each company directly regarding content and press release questions. Disclosure is posted for each compensated news release, content published /created if required but otherwise the news was not compensated for and was published for the sole interest of our readers and followers. More disclaimer info: http://www.investorideas.com/About/Disclaimer.asp
Additional info regarding BC Residents and global Investors: Effective September 15 2008 - all BC investors should review all OTC and Pink sheet listed companies for adherence in new disclosure filings and filing appropriate documents with Sedar. Read for more info: http://www.bcsc.bc.ca/release.aspx?id=6894. Global investors must adhere to regulations of each country.